At its meeting earlier today, Thursday, March 19, the ECB decided to maintain its three main interest rates at their current levels. The deposit rate remains at 2%, the main refinancing operation rate at 2.15%, and the lending facility rate at 2.40%, marking the sixth consecutive meeting where the ECB has held its rates steady.

In its policy statement, the ECB stated that the Governing Council is determined to ensure that inflation remains at its 2% target over the medium term, despite heightened uncertainty due to the war in the Middle East, increased inflation risks, and slower economic growth.

The ECB staff’s new forecasts project inflation to average 2.6% this year and 2% next year. These inflation forecasts have been revised upwards due to higher energy prices resulting from the war in the Middle East. Core inflation, excluding energy prices, is expected to reach 2.3% this year and 2.2% next year.

Growth projections have also been revised downwards, with economic growth now expected to average 0.9% this year and 1.3% next year. The Governing Council is committed to ensuring inflation remains at its 2% target over the medium term and will adopt a data-driven approach, making decisions at each meeting to determine the appropriate monetary policy. The Asset Purchase Programme (APP) and the Pandemic Emergency Purchase Programme (PEPP) are being phased out at a measured and expected pace, as the European Central Bank (ECB) has ceased reinvesting capital payments from maturing securities.

Markets are awaiting the ECB President’s comments and question-and-answer session with journalists at the press conference, which is expected to begin in approximately 45 minutes.